PRINCIPLES OF VALUE AND PRICE 461 



3. Another interesting result of the characteristic of inelastic 

 demand for farm products is the fact that popular judgment, and even 

 the opinion of authorities occasionally, with reference to the extent 

 of the surplus or shortage of a particular farm product or of farm 

 products in general is subject to sudden and violent change as well 

 as to the wide departure from the actual facts in the case. Since a 

 relatively small shortage in a farm product particularly a food 

 product has a relatively large effect on the price, popular, and 

 occasionally expert, opinion immediately jumps to the conclusion 

 that the shortage must be proportional to the rise in the price. Simi- 

 larly, with a relatively small surplus and a resulting relatively heavy 

 fall in price, the immediate conclusion is that there exists a corre- 

 spondingly heavy surplus. 



145. THE ERRATIC PSYCHOLOGY OF DEMAND 1 

 BY GEORGE K. HOLMES 



The growing, the preparing, and the marketing of many of the 

 products of the farm are becoming questions of art and psychology. 

 When people buy food, they buy it often not primarily for the grati- 

 fication of taste, but upon the testimony of the eye, which is pleased 

 with form and color, and upon the perception of odor, while, if the 

 consumer was reared in the country, perhaps his choice is determined 

 by the farm-bred fancies of a happy youth. 



What set of nerves shall have the preference in determining the 

 purchase of a farm product, the optic or the gustatory? Shall a 

 thing be pretty, or delicious; and, since the sense of smell must also 

 be consulted in some cases, is it of much consequence whether it is 

 pretty or delicious ? The seller has much more definite information 

 with regard to these questions than the consumer; although it is the 

 consumer who makes the choice, he is induced to do so by the 

 seller's subtle knowledge of his fancies, which need not be and 

 often are not either sensible or reasonable, but, on the other hand, 

 often verge upon the notional, and seem superfluous to an unsophis- 

 ticated farmer. 



Butter is an article of food, and, as all but its makers and sellers 

 believe, it is bought mainly for food reasons; yet, upon mental 

 analysis, it appears that butter is not bought alone for its nutritive 



1 Adapted from "Consumers' Fancies," Yearbook of the Department of Agri~ 

 culture, 1904, pp. 417-33. 



